Marginal Utility

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics." -FDR

Monday, January 31, 2005

Yesterday's Joke is Today's News

by Tom Bozzo

When I blogged last week about the "magic of personalization," I was of course trying to be mean to the would-be Social Security privatizers. Now it turns out, according to this morning's Post, that "personalization" actually is the Congressional Republicans' latest preferred term for the still-mysterious Plan. Life imitates art after all!

We'll see how long that survives comparisons to other "personalized" communications. Suggestions, anyone?

Update: Matthew Yglesias, among other major bloggers commenting on the latest privatization language, notes that personalization has been a largely unsuccessful movement in web design.

Speed Bump

by Tom Bozzo

Rumor has it that the PowerBook G5 will be in production next quarter, but apparently not too early next quarter, as Apple bumped the G4 line's specs this morning. PowerBook updates were notably missing at Macworld San Francisco.

Cool new feature: drag with two fingers on the trackpad to scroll/pan through the active window.

* Updated with Ann's political self-identification. Particularly as amended with a link to and excerpts from Nina's comments, I'm sympathetic to the point she makes.** I don't know Ann well, but I know more than enough from reading Althouse on a regular basis — which is probably not an activity I share with many other left bloggers — to be convinced that she's not remotely a "wingnut," as Kevin Drum unfairly labeled her. But, as Nina points out, restraint is not the hallmark of the blogosphere. And, as "Oscar" noted a while back, it is not safe to assume that one's "readers" are necessarily carefully reading one's blog. Even though they should!

** This is not to say that I agree with her characterization of the left versus right blogosphere linking approaches, which looks like induction from the relatively predictable reception given by both sides to her pro-Bush and anti-Kerry blogging.

"We raised our glasses to the kids, and they raised their juice boxes back to us."

by Tom Bozzo

That's what happens when the worlds of children's and grown-up rock almost collide, says yesterday's Times profile of Chicagoland children's music phenomenon Ralph Covert.

We are already among Ralph's "secret fans," and were mostly interested minutiae like the title quote and the background to an inside joke about the Old Town School of Folk Music in Ralph's rendition of "The Itsy-Bitsy Spider" (on "At the Bottom of the Sea").

It was interesting to see Ralph's World's cumulative album sales reported at approximately 120,000. That's enormous for an indie label, but small enough to afford us a degree of superiority over at least some hip coastal parents. (Ralph's sales probably are at least moderately concentrated in the Chicago area, though the BN.com review here was penned by a college friend who lives in lower Manhattan.)

Madison-area parents note: Ralph's World will play the Wisconsin Union Theater on March 6, benefiting Friends of UW Hospital and Clinics.

Understanding Schooling: Using Observed Choices to Infer Agent's Information in a Dynamic Model of Schooling Choice when Consumption Allocation is Subject to Borrowing Constraints

indeed shows little economy of language in its 24 words, and further manages to convey almost no useful information about the contents. Though I have to say "consumption allocation subject to borrowing constraints" does at least sound amply like (micro)economics to me.

After locating and reading the first few pages of the paper, which is the job talk paper for a Chicago Ph.D. candidate who is a student of James Heckman, 2000 economics Nobel co-laureate,* I noted in JFW comments a feature of the paper's economic model — a constraint that agents cannot die in debt — that sparked just the sort of high-minded exchange the blogiverse is known for. Jeremy asks,

Tom B.: Something I've always wondered: When an economist reads that a person has "died penniless", do they think this is sad like most other people do, or is their first reaction: "Cool. So optimal."

Jeremy: With an elephantine Chicago-school economics target in the crosshairs, I can't tell you how much I'd like to say yes. You might be able to get that answer out of Donald Luskin. But economic "theory" says that it's only optimal to die penniless (in the absence of a bequest motive, etc.) if an agent has perfect foreknowledge of the agent's own death.** This is in part why more-or-less rational people will convert wealth into annuities (foregoing up some of the wealth in the process), and why programs such as Social Security are popular, given the alternative of running out of money and having to eat cat food or worse.

So an economist would consider it a shame that the person made a poor choice ex post.

Saturday, January 29, 2005

The Demographic Deficit

by Tom Bozzo

If the previous posts on Social Security haven't put enough of a spring in your step, then refill your antidepressant prescription and take a look at a new McKinsey Global Institute report* (registration req'd for download) "The Coming Demographic Deficit: How Aging Populations will Reduce Global Savings." From the executive summary:

MGI's new report reveals that the aging of the developed world is creating a demographic deficit that could radically transform the financial wealth of households, and therefore, the capital available to businesses and government.

MGI's key finding is that over the next two decades, absent dramatic changes in saving behavior or returns earned on financial assets, growth in household financial wealth will slow by more than two-thirds, from 4.5 percent historically to 1.3 percent going forward. This slowdown will cause the level of household financial wealth to fall some 36 percent, or approximately $31 trillion, below what it would have been had the higher historical growth rates persisted.

The U.S. will be by far the largest source of the global shortfall ($19 trillion) because of the U.S. dominant share of global financial wealth...

Unfortunately, there are no easy ways to counterbalance the coming decline in wealth. MGI found that no country outside the developed world can generate enough new financial wealth over the next two decades to meaningfully address the projected shortfall... It is unlikely that nations will be able to simply grow their way out of the problem either. Increasing economic growth without changing the relationship between income and spending will not by itself change the amount of savings enough to materially alter the rate of wealth accumulation.

MGI found that achieving higher rates of real financial asset appreciation is the most powerful adjustment... Other changes that could also mitigate the downward demographic pressure on savings to some degree include extending peak earning years ― chiefly by increasing the retirement age, and raising the savings rate of younger generations.

In short, we need to save more, borrow less, and earn higher returns on our saving, not in that order. Obviously, this is bad news for the Bush administration's addiction to public sector borrowing.

As for the solutions, I mostly allowed an initial "well, duh" reaction to the 'improve rates of financial asset appreciation' solution to pass. Some of the potentially effective means for improving rates of return, such as improving the efficiency of financial intermediation or —reading between the lines — eliminating corporate welfare, would be politically painful. (And there would go the Manhattan housing market.) Others, like promoting innovation and protecting intellectual property, can be at cross purposes. Mandatory savings programs that don't lead to the end of Social Security will not go down well with the libertarian think-tanks.

Are we screwed? The conclusion is hard to avoid.

* In the interest of full disclosure, I should note that one of my two best friends from grad school , who has the Google misfortune of sharing his name with an Emory University College Republican, is a coauthor of the report.

Friday, January 28, 2005

Right-Wing Math III: More Devils Meeting Details

by Tom Bozzo

Max Sawicky contributes to the Social Security privatization calculator debate by coming up with a ballpark figure of 9% for the above-current-market interest rates needed for the annuity calculation in the Cato Institute's private account calculator. A commenter there raises a technical issue regarding the distribution around the mean life expectancy and wonders if there might be a "reasonable" interest rate that makes the calculations work out.

Assuming some shooting-from-the-hip risk, I'll say not quite. In this case, good candidates for "reasonable" interest rates above those currently prevailing would be the rates assumed in the Social Security Trustees' projections. These range from 5.5-6 percent (nominal); see Table V.B2 in the 2004 Trustees' Report.

Earning 6% instead of the current 4.125% (the TSP annuity rate index) would not quite produce enough income to make up the difference between an indexed TSP single annuity ($46,476) and Cato's claimed maximum private benefit ($64,873) for my steady maximum earnings scenario.* So they must either be assuming a higher interest rate than is assumed in the long-range Social Security projections, or lower annuitization costs than are available through the TSP, or some combination thereof. (If someone knows more about TSP annuities, please chime in!) This is at least stretching the definition of reasonable. Things would be no better for the Heritage Foundation's calculator.

Even if your definition of reasonable is broader than mine, that you can't currently get an annuity on the terms the calculator assumes should itself sound a cautionary note.

Cato's calculator also somehow returns a somewhat smaller real Social Security benefit ($28,910) in 2035 than the $33,047 projected by the Trustees for a steady maximum earner.

Last, as Max notes, Cato excludes — explicitly, in a footnote — any allocation of transition costs, which makes the calculators' results immediately bogus. Cato's plan does set aside half of payroll taxes to cover transition costs, but that would nevertheless require some combination of large-scale borrowing (deferred taxes) or infusion of income tax revenues into the legacy system. Obviously, paying the transition bill would thoroughly dig into Cato's already rather meager privatization gruel.

* The extra 187.5 b.p. would mean $1,064/month in interest on the $681,252 PRA balance at retirement. And note, a TSP indexed joint annuity with 100% benefit to the survivor would only yield $36,528 presently.

In the previous post, I ridiculed the Heritage Foundation for running a calculator that suggests I could have another $5,112 per month (2004 dollars) in retirement if only I had a private account, stuffed with the Old Age and Survivors component of my Social Security Tax payments and invested in Treasury IOUs under Heritage's assumptions. This is above the $2,810 I would expect from Social Security and its Treasury IOUs.

What problem, a Heritage fellow might ask, does any economist have with getting an additional $61,344 per year?

Nothing, I say, except that no sustainable, non-criminal enterprise would sell me such an annuity.

Under the assumptions I provided, meant to force the "Steady Maximum Earnings" scenario from the Social Security Trustees' annual report, Heritage suggests that I could have a personalized retirement account containing $972,569 at age 67. They claim that could be annuitized to a monthly benefit of $7,922, hence the $5,112 gap.

The Social Security Trustees project the maximum benefit at normal retirement age in 2035 — when I would in fact turn 67 — to be $2754, so while I have no idea why Heritage didn't use the Trustees' projected maximum benefit, the error is a minor $56 in their favor. This ends the good news for the privatizers.

The next question is whether a 67-year-old can actually buy an annuity with a $7,922/month benefit with $972,569. I turned to the federal Thrift Savings Program's annuity calculator. The TSP, which offers federal employees a short menu of extremely low-cost savings vehicles, is often held up as a model for private accounts. I assume that the TSP also insists on low costs from its annuity provider(s).

As a single 67-year-old TSP participant with $972,569 to annuitize, I could get $5,529/month with a subsequent 0-3% inflation adjustment. (The adjustment, as an Yglesias commenter notes, is not as generous as Social Security in high-inflation periods.) This drops the gap to $2,775, 54% of the Heritage calculator's result.

That's not all, though. Social Security also provides a 100% benefit to a normal retiree's surviving spouse. This is costly, as the probability that some beneficiary will live to be very old increases considerably. Indeed, the same amount only buys a $4394/month in a joint life annuity with a 100% benefit for the surviving spouse. The gap now falls to $1,640, just 32% of the Heritage estimate.

While the 3% real Treasury yield assumed by Heritage is consistent with the Trustees' assumed yield on the Trust Fund assets in the intermediate Social Security scenario, you can't actually earn a 3% real yield on Treasuries now. (The 10-year note currently has a real yield of a whopping 0.9% over 2004 CPI-U inflation, and truly whopping interest rate risk under current conditions.)

Knock 80 basis points off the real return and the private account gap is roughly halved again, to $805, since there's 19% less to annuitize. Now I'd just be getting another $9,660 per year, and haven't adjusted anything for risk or privately provided for additional features of real Social Security such as pre-retirement survivor's benefits. That, I can forego.

At this point, if I were what Heritage considers an average earner*, I'd actually be $249/month ahead with traditional Social Security.

If you've gotten this far, you may see part of the problem. Introducing reality rapidly decreases the attractiveness of privatization, but you have to wade through annuity arcana and economic assumptions to get there. The sly marketers at the right-wing think tanks are probably betting that the whopping projected private account balances will light up dollar signs in viewers' eyes such that they'll forget about the rest.

* Heritage assumes the average 37-year-old male earns 156% of the Social Security average wage index.

Thursday, January 27, 2005

Right-Wing Math

by Tom Bozzo

A couple of the bigkids are already having a lot of well-deserved fun with calculators posted by right-wing think tanks to help push Social Security privatizationprivate accountspersonal accounts personalized accounts.

One thing that seems to have inexplicably escaped notice is that the Heritage Foundation's calculator allows the user to choose a mix of stock and bond investments. So while playing with the calculator, I set the investment allocation in my hypothetical personalized account to 100% U.S. Treasury bonds — the very same worthless IOUs that the Social Security trust fund already holds.

According to the Heritage calculator, the magic of personalization adds $5,112 per month to my retirement income, relative to plain old Social Security. Wow!

There are, needless to say, some other less bloggably amusing technical flaws in the Heritage calculator without even going into the realm of dubious assumptions. This will not do much to convince us highly educated liberals that we are not actually a little smarter than our conservative peers.** Just kidding!**

So what about an alternative, smart guy? I think Oscar's "w." ("little w") was on the right track. My similar though not original suggestion, considering how hard the current administration tries either to forget about — or to do the opposite of — that other President named George Bush: "Junior."

As If I Needed Another Hobby

by Tom Bozzo

Light blogging today. I will be headed into work early so I can attend this afternoon's meeting of the Joint West Campus Area Committee as part of my neighborhood association's delegation.

This committee, among other functions, is meant to make the surrounding neighborhoods feel better about the forthcoming 2005 UW-Madison Campus Master Plan than they did about the 1996 Master Plan (4.7 MB PDF), which apparently was devised with less neighborhood input than the neighborhoods would have liked. And we all know how Madisonians feel when they can't put in their two cents on something.

An interesting question will be how closely the 2005 plan will be followed. Conspicuously not among the actual West Campus structures incorporated in the 1996 plan is the West Campus Cogeneration Facility*, which the neighbors really didn't like very much.
* At MU, we applaud the facility's efficiency but are curious about the "innovative mitigation methods" for the facility's air pollution and water use.

Monday, January 24, 2005

Computers At The Wheel, II

by Tom Bozzo

Responding to this post on research into the effectiveness of electronic stability control system for accident reduction, "Oscar" at Columnist Manifesto suggests that the systems need to be more proactive about cell phone-talking SUV drivers.

Meanwhile, Ann Althouse wrecked her car (an actual car, not an SUV) in a mishap that stability control wouldn't have done anything to prevent.

Never fear, the auto industry is about to field the first wave of predictive collision avoidance systems. And I'd wager that cheap computing will put some sort of collision avoidance system on practically every upscale car before the "Zilches" are out.

The baby steps have already been taken in the form of "brake assist" systems — which correct a common driver error by detecting panic braking and applying maximum brake force regardless of the driver's actual brake input (even available on the '05 New Beetle as part of a $280 stability control option) — and cruise control systems that use radar or lidar sensors to let large luxury sedans automatically maintain following distances.

Put them together and you get this Detroit Auto Show announcement of a new feature for Honda's top-of-the-line sedan:

This fall, the 2006 Acura RL will be equipped with Collision Mitigation Brake System (CMBS) + E-Pretensioners... CMBS uses millimeter wave radar to detect a collision before it happens and alerts the driver with audible and visual signals and by pre-tensioning of the seatbelt. If an accident appears unavoidable, the system applies braking force to reduce the severity of the collision. [Emphasis added.]

But wait, there's more! Many fatal accidents are caused by "lane departures" — i.e., driving off the road or into oncoming traffic — and there's a solution to that, too, in the form of a lane departure warning system to be available on some 2006 Infinitis.

The Infiniti Lane Departure System recognizes lane markings through the use of a small camera mounted behind the rearview mirror... A judgment is then made as to whether the vehicle is moving out of the lane (depending on the distance and lateral velocity to the lane).

If it is determined that the vehicle is leaving the lane, both visual (indicator light located on the instrument panel) and audible (buzzer) warning signals are generated, alerting the driver to take corrective action...

"Some of the typical scenarios where the Lane Departure Warning system will warn the drivers when they are not giving 100% of their attention to driving and drift out of their lanes of travel are, for example, adjusting the audio system, looking at other occupants, searching for addresses or landmarks when driving on unfamiliar roads, or when concentrating on conversations rather than driving," said [Nissan product safety director Robert] Yakushi. [Emphasis added.]

It is not that big of a step to add the additional feature of generating a steering input to relieve the driver of the need to actually notice the lane departure warning.

I expect that many legal minds will be occupied with the disclaimers and shrink-wrap contracts to try to keep people from suing over the accidents not prevented by these latest safety systems. (For instance, see here [Flash] for what Mercedes says in a Web demo of its "Distronic" cruise control system.)

The A-Bomb vs. the I-Bomb, or Why Time Series Frequency Matters

by Tom Bozzo

A funny thing happened to the traffic at this blog on the way back from Blogger dinner, which broke up just before midnight Saturday. Need I mentioned that the attendees vary widely in intensity of traffic-monitoring obsession? I'm not even sure I'm the most obsessed, though I shall give it a go.

Anyway, here are the Sunday hourly visits to Marginal Utility through 10 P.M., courtesy of Site Meter.

Traffic has been running around 20-25 visits a day, and as recently as last month the traffic patern above would not have been at all unusual for the daily take. So what happened?

A steady stream of curiosity-seekers arrived from Jeremy's and Tonya's simul-blogging throughout the dinner and subsequent festivities. Then the A-bomb dropped, as Ann weighed in with links to the other attendees' simulblogging posts. Since her traffic is roughly 200 times larger than mine, and unknown multiples of everyone else's, even lowish click-through rates have big effects on my traffic.

Sunday, January 23, 2005

The Blogger Dinner Post-Game Show

[Sunday afternoon addendum: some "answers" and questions 9-10 added. Addendum to the addendum: new #10 added, old #10 renumbered.]

1. How do bloggers' blog and "real world" personae relate?

One might further ask what light a dinner party sheds on the question.

2. If Nina offers to cook for you, should you accept? (The easiest answer of the bunch: YES!)

Ann provides additional, well-deserved, high praise for the evening's meal, as well as a menu summary.

2a. Were special food accommodations made for any of the guests?

No, but as incriminating photos have yet to be posted elsewhere, that's all I'm saying.

3. Are lawprofs competitive? (Another one that is so easy that I'll leave it as an exercise.)

4. [redacted]

This is a topic that particularly interests me as the only non-academic of the bunch, but even the question would give plenty away, and I'd consider the related discussions to be embargoed until someone else spills the beans.

5. Is Madison a good place to be single?

Maybe if you're 20. At 30, no way. Given a sufficiently activist social network, though, that might be softened to a "not really." Note, 5-1/2 years ago, I was plotting how fast a car I'd need to reify an early mid-life crisis when activist friends put me out of my misery.

Not, I averred in a portion of the conversation reported elsewhere, William Gaddis' Agapé Agape. I'd give a nod to Vineland for its density of pop culture references. I think it was Frank Kermode who was befuddled, on behalf of mainstream literary criticism, by references such as "Midol America." But I'm less sure about that (i.e., that Kermode specifically cited the Midol America pun) than the publication date of The Recognitions.

10. What movie, which you coincidentally picked up on DVD right before Christmas, did the Hoopla debacle make you most want to watch.

Doug Liman's Go (1999). Cf. Nina's comment. This is less a reference to wanting to die (that moment, earlier in the evening, involved a disintegrating cracker underneath a piece of smoked salmon, but I think everyone else was too busy either cooking or simulblogging to notice) than to portions of the action in the film's first and third acts.

Saturday, January 22, 2005

Yet Another Blogger Dinner Post: Hoopla

by Tom Bozzo

I tried to carefully limit my Larry Summers blogging to picking on Harvard men to avoid getting into too much trouble at Blogger Dinner.

At the game stage of the evening, this turns out to have been a good move. Tonya (Harvard Law) rocks at Hoopla. So does Jeremy, more than holding up the public university end of things. My wits are dulled for some reason.

Fun if not important fact: alcoholic beverage prices have basically tracked the CPI over the last 10 years. That is not, it so happens, true of top-shelf liquor.

Hail to the Chef

by Tom Bozzo

My non-charge-holding battery has killed one of Nina's Champagne glasses. (I.e., my power adapter got knocked off the kitchen counter.) Ann is taking a hit of juice from it at the moment.

Did I mention that this Madison faculty (plus me) blog corps is now majority Apple? I have my creaky Titanium PowerBook. Tonya has a sleek 15" Aluminum. Ann has an iBook that convinced me that an iLife upgrade shall be forthcoming even if the G5 PowerBook doesn't show up in a timely fashion.

Is the Pope Too Catholic?

Then, Nina faults Jeremy and me for mockery of some dorky stuff intended to boost our respective professions. And I didn't even crack wise about nobody wanting to trade two Simon Kuznets and a Robert Lucas for a Keynes rookie card!

In return, Nina shows off one of the great homemade T-shirts that I've seen, rivaling in spirit a T-shirt that a Delaware friend's (now ex-)wife had made for him — also grad school topical, in this case English Lit. — with a design, as I recall, combining elements from the cover art of the Bantam and Picador editions of Gravity's Rainbow.

I will now stop writing before I get myself into any trouble that might get me un-invited from future blogger dinners!

Into Every New Parent's Life...

by Tom Bozzo

You want an uplifting post? Visit the allied baby blogs to the right, or see here, or even Jeremy on American Sociological Association logo infant wear.

This post is about the inevitability of vomiting. Which John did overnight, in copious amounts. Remarkably, it didn't materially interrupt his sleep, so we didn't discover the mishap (which he repeatedly called a "spill") until 7.

Based on stories I've heard, John has managed to maintain, by toddler standards, an almost Seinfeldian streak of not throwing up. Sure, he gagged on acetaminophen suspension once as an infant, and had an airsickness episode in the summer that ensured we had an eye, if not a hand, on the barf bag throughout our Christmas flying.

But he spit up so little in the nursing days that I felt free to wear dry clean only work clothes around him (which habit is negatively reinforced from time to time by Julia), and so I think of the John experience as two years, two months, and 19 days of vomit-free parenting.

As I was commending his bedding to the washing machine, I was marveling at how that could be. Such infection control standards as parents might practically enforce are surely no match for constant touching of unsterile surfaces and sticking unwashed fingers in the mouth, nose, etc.

Friday, January 21, 2005

Friday Baby Extra

One New Year's Resolution Bites the Dust

by Tom Bozzo

It was a joke, really, but it still took less than three weeks to break.

Charlie Stross can causally attribute at least three hardcover sales (so far) to Brad DeLong's plug of Singularity Sky back in 2003. The prolific Stross has another novel currently in print that I don't have (yet), yet another coming this summer, and one more just completed and due next year.

As for the other one, I figured I should get cracking so I could someday have a clue as to the extensive Crooked Timber discussion of Miéville's recent work.

Judge Posner's Promotion Possibilities Frontier

by Tom Bozzo

At Stone Court, Fred Vincy does some blogs-I-don't-like reading for me, and finds Richard Posner getting off message on tort reform at the Becker-Posner Blog (which I don't dislike too much to link). "There Goes That Supreme Court Nomination" is the punch line. In typical blog fashion, it is also the headline.

Stone Court also links a pair of 2003 Jack Balkin posts, notably this one, that make a reasonably convincing case for Judge Posner as the conservative candidate for CJOTUS Bush should nominate but won't.

While "too old" — Posner turns 66 this year — would be part of the problem given modern Supreme Court nominee selection strategy, "too secular" is, sadly, just as strong of a there-goes-the-nomination reason with a blog link to go with it.

"God doesn't exist for me," Posner wrote during his holiday guest blogging stint at Leiter Reports, "...I think that whether or not God is dead for one depends on upbringing and temperament, but not on arguments."

Thursday, January 20, 2005

Auto Service Diary

by Tom Bozzo

8 A.M. Zimbrick BMW’s new home, across the Beltline Highway from the old pan-European location, is not quite finished. They've been in there since Monday. The lounge area features a big HDTV, but offers no Wi-Fi signal. A large balcony overlooking the showroom floor is empty, as are adjoining offices. What will become the real service waiting area looks like it will have wired data ports, but it’s not finished yet, either.

Based on the mug logos, the waiting area coffee should be Ancora. This cold is leaving my taste buds unable to determine whether or not it’s actually Ancora.

I learn that my key stores the car’s mileage among other parameters — didn't realize it could rat me out.

The bright fluorescent lighting makes my screen look dim and very dirty. (It is very definitely the latter.)

The red 325xi in front of me is the most handsome car on the showroom floor IMHO. I can be very conservative in these matters. I’d have been satisfied had the E46 coupe stuck to the mold lines of the E36, though I vastly prefer the current model’s interior.

The 645Ci is sleek, but has amazingly little back seat room for such a large car. A virtue of the trusty 3 is that friends and family of normal height can survive short rides in the back as needed. Headroom in the 6 is limited, too, though the power is off and so I can’t reposition the seat.

8:45. The mobile rings, and Suzanne says I must be in heaven, surrounded by cars and with unlimited coffee, peace and quiet, and a computer.

9:30. I stretch my legs past a 545i on the floor, loaded to the tune of $65,020 on the window sticker but discounted to $58,995 as it’s their last ’04. I’ll break from E60 bashing elsewhere and say it’s looks good to me, though in the slick conditions outside it won’t be going anywhere (sport package, summer tires, can’t safely be driven out of the parking lot). No way it’s worth two Acura TLs. It’s also Black Sapphire Metallic, which doesn’t seem quite as sparkly as the Cosmos Black of my old M3.

Moreover, my post-M3 rule still applies: no more black exterior cars — I don’t want to have to turn over a paycheck to Octopus Car Wash. So that one won’t be the winner in my on-again, off-again search for a family sedan.

Maybe if they make me an offer I can’t refuse.

10:15. 2nd leg stretching break. I do not like the 745Li, even though you could have a pretty well populated party in the back seat. All but the most basic controls are solutions in search of problems (trick gear shift, trick seat controls, iDrive). The matte-finish cherry trim does look like real wood, but it manages to not quite go with even the beige leather of the example on display. A belt of speckly gray plastic or fiberglass trim running from the lower dash through the door panels does not go either. The rear seat ashtray lids feel cheap. All this for $79,000.

Some construction work in the future service waiting area is breaking the peace and quiet.

11:30. Boredom sets in. My car is not visible in the service bay. No internet and no TV (cable not hooked up to the HDTV) make blogger go crazy. I should have gone to the office, even though I’ve written a few hundred words in service of an upcoming deadline in the relatively distraction-free environment.

Maybe they’re trying to break me down so I'll take the 545i to get out of here.

12:10. Nope! They just forgot about me. My service adviser looks a bit ashen. Labor on the iPod adapter is comped for my wasted time. Good, good service adviser! It's interesting to consider the implications for what BMW must do to them if I report an unhappy experience, as the installation was 1.5 hours at $92 per.

The visible sign of the iPod adapter work is a little white wire in the glove box with a dock connector plug on the end — very minimalist.

Stay Tuned

by Tom Bozzo

Now that I've wrung additional snark out of my system, the car has an early appointment for an oil change and installation of an iPod interface, and I must run. I may or may not blog from the new Zimbrick BMW facility, depending on their internet access accommodations for service customers.

Wednesday, January 19, 2005

Sweat Shop

[Summers] offered three possible explanations, in declining order of importance, for the small number of women in high-level positions in science and engineering. The first was the reluctance or inability of women who have children to work 80-hour weeks. [Emphasis added.]

Yikes! Would this be substantially true of the social sciences?

It did not completely escape my attention in the grad school days that the more tenurable of the Maryland junior economics faculty were putting in long hours, and that some the tenured folk with the largest total product maybe weren't spending enough time with their kids either.

Even in my putatively more "agentic" single male days, I never worked anything close to an 80-hour week. I'm pretty sure I could count the number of 60-hour weeks I've worked on my digits, with an extremity or two left over. This is not accidental.

While I don't normally blog about work, I think I'm safe in saying that my workplace is organized on the principle that it's not worth burning out the staff — junior or senior — by routinely trying to extract such marginal product as might be available from one's fried brain in the forty-fifth weekly hour of making the clients' numbers into better numbers, let alone the eightieth. Of course, this is an incredibly family-friendly arrangement.

I won't be envying my academic pals tonight.

* Apologies to the Stone Court bloggers. I had absentmindedly typed "Stone Fence" initially. Stone Fence is a store in the mall across the street from the office.

Moms and Momness II

by Tom Bozzo

But for an upcoming blogger dinner, for which I am informed it may be useful to brush up on the attendees' blogging activities, this might have gone to the Island of Lost Posts.

The Maureen Dowd column, "Men Just Want Mommy" (get it while it's free), didn't initially register much with me, but it fired up a bunch of Ann Althouse's readers last week and subsequently Ann — who had originally noted it with a one-line post — herself.

Even though I don't think the column was very well-argued*, I have no quarrel with anyone who found it worth discussing, not least because I'm mentioning it here. And after some internal debate**, I concluded that I actually completely agree with Ann in the following:

Instead of just reflexively denying the problem, why not think deeply about equality?

I saw email and blog posts ridiculing Dowd, calling her a "53-year-old spinster," comparing her quite beautiful NYT photograph to the face of the witch in "The Wizard of Oz," and asserting that the powerful women she wrote about really can't get men because they are such nasty bitches.

Equality of the sexes is one of the truly excellent principles in this world, and there are great and complex forces militating against it. Please don't just sit back and say "I'm happily married" or "Men will have no problem with successful, powerful women as long as they are caring and loving." Look around! Think! It's not that easy!

True. This requires much more thought.

* Among other things, I'm not convinced that the marrying habits of rich and powerful men constitute a new problem, and I don't care for her induction from popular media method (which can be fun when done right, but cf. Jeremy Freese). As the column is soon to disappear into the Times paid archives, here is how it goes, paragraph-by-paragraph:

1. Relates an anecdote about meeting an actress who wants to be married but can't because "men [with personal assistants or PR women] only want to marry their personal assistants or P.R. women."

2. Reports that Dowd sees a trend of rich and powerful men marrying young assistants of various types. Dowd does not name names.

4. Posits the Tracy–Hepburn repartee as the one-time film relationship ideal. Fine, though suggestions for the archetypal millionaire-and-the-help romantic fantasy are welcome. She doesn't mention such fare as "The Seven Year Itch," "The Apartment," or "Good Neighbor Sam." And Mark Kleiman (seemingly admitting to being part of the not unrelated beauty myth problem) touches on the actual Tracy-Hepburn relationship, a useful demonstration of the downside of casual nostalgia which I think has much broader implications here.

6. Describes features of second movie plot ("Love Actually") allegedly reflecting the paragraph 2 trend. This seems slightly less on-point. Alan Rickman does not portray a sympathetic character. Also, Martine McCutcheon is not "chubby."

7. Parenthetically digs at Kelly Ripa.

8. Asserts that art is imitating life.

9.-13. Cites reports on academic studies of marriage attitudes. See J Autumn (and Jeremy Freese's comment) and Althouse for discussion of why the cited studies are not dispositive.

14. Asks rhetorical questions about the failure of feminism, offers generalization about what "a lot" of men want.

15. Carrie Fisher confirms the thesis.

16. Relates brilliant quote from Carrie Fisher: guys are jerks. ("[K]ings want to be treated like kings, and consorts want to be treated like kings, too.")---------------
** Both figuring out what I want to say and dealing with spousal "aren't you having dinner with these people" questions.

Computers Drive Better Than People

More precisely, electronic stability control systems are astonishingly effective at helping drivers avoid single-car accidents, according to studies by NHTSA and IIHS. (Via Car and Driver.)

The systems, which work in conjunction with anti-lock braking systems to better translate drivers' intentions into the actual direction of travel*, reduce the risk of single vehicle accidents by roughly 40%, and reduce fatal single vehicle accidents as much as 56% by the IIHS reckoning.

If stability control systems — equipped on 7.4% of 2003 new cars — were in universal use, several thousand fewer traffic deaths would occur annually. As this would eventually cost about $1.2 million per life saved**, it would appear to pass cost-benefit muster. Much wider deployment, as well as autonomous reductions in electronics costs, would probably lead to large reductions over time in the current $500 cost of the systems and thus widen the benefit-cost gap.

As a snow belt owner of a rear-drive car with all-season tires and electronic stability control, and now further as a resident of a street that is low on the city's snow clearing priorities, I can attest to the often uncanny effectiveness of the systems.

SUV detractors might note that the NHTSA study shows double the effect of stability control on total and fatal crash rates for SUVs versus cars — a 67 percent single-vehicle accident rate reduction. This has a lot to do with the tendency of SUVs to roll over when they depart the road out of control, but also speaks volumes as to the fundamental controllability shortcomings of SUVs.

There are some uncontrolled factors that the NHTSA researcher suggests might increase the measured effectiveness of stability control for SUVs, notably higher seat belt use in the stability control group. However, the bulk of the SUVs equipped with stability control for the study were Lexus RX300 and Mercedes M-class models, which are arguably among the better-handling SUVs to begin with. So I wouldn't be surprised if the stability control effect weren't bigger in truck-based SUVs with primitive suspension systems and relatively high centers of gravity.

* Provided the driver doesn't expect stability control to repeal the laws of physics, as the systems' legal disclaimers note.

** Based on the current $500 cost to equip each of 17 million new vehicles annually, and 7000 fewer annual fatalities.

The Joys of Home Ownership

Madison weather conditions have moderated from the weekend's deep freeze and, as of this writing, the outside temperatures are actually above freezing.

Meanwhile, John (getting over a cold) woke up early (5:20 A.M.), and I accordingly got up to get him a drink of water and to urge him to get back to sleep. It worked! Woohoo!!

Back in bed, I heard the heat click off followed by steady dripping overhead. Hmm.

I started into the atticway and threw open the styrofoam insulation panel that helps us avoid heating the attic too much, then climbed the balance of the attic stair to see what was up. Evidently, moisture from the upstairs air — mainly from the non-vented upstairs bath, no doubt — turned to frost on the inside of the cold roof and began reverting to liquid water in the relatively warm conditions.

Oh. Joy.

Needless to say, this focuses and rearranges the list of home improvement priorities.

Tuesday, January 18, 2005

Moms and Momness I

Probably due to its outside origin, the Wisconsin State Journal story I mentioned yesterday, headlined "Moms are advised to leave their momness at home," doesn't look like its coming back.

The original research is the Journal of Social Issues paper, "Mothers and Fathers in the Workplace: How Gender and Parental Status Influence Judgments of Job-Related Competence" (abstract).

Here is most of the abstract:

We investigated the influence of gender and parental status on employment decisions. The shifting standards model predicts that parenthood polarizes judgments of women and men such that mothers are held to stricter employment standards than fathers. Social role theory predicts that parenting role, rather than gender, guides judgments of mothers and fathers. One hundred ninety-six undergraduates at two universities evaluated a job applicant; the applicant was either male or female and was either single or married with two children. Results showed that parents were judged less agentic and less committed to employment than non-parents. Parental status also interacted with gender, indicating that fathers were held to more lenient standards than mothers and childless men. [Emphasis added.]

Comments:

1. Like a widely-discussed study of the effects of televised sex on teenagers (my take), the conclusions by and large are not radical and thus don't necessarily require extraordinary evidence.

2. Still, using a survey of undergraduates to investigate "employment decisions" gives me little prior confidence that the study is even measuring what it purports to measure because:

2a. Undergraduates, as I observed on a late drive back from the airport Friday night, will hop bars without coats or hats on sub-zero nights, so what do they know?

2b. Undergraduates specifically are not likely to have well-informed beliefs about the natures of the workplace or of parenthood.

2c. In possible defense of the study, the Mercury News article suggests that the authors were after "latent attitudes." In that regard, sure, undergrads will probably tend to respond with such stereotypes as they've absorbed.

3. The workplace rights posters in the lunchroom at the office indicate that some of the attitudes measured, translated in to hiring decisions, could constitute illegal employment discrimination, though IANAL. This is not to say that it doesn't happen, of course, but a well-functioning HR department should mitigate the effects on hiring decisions.

4. My direct experience of whether it's customary to ask marital or parental status in job applications is limited, but what I have suggests it isn't. The workplace rights posters suggest it may be illegal to do so in Wisconsin.

5. I would expect that it is easier for latent attitudes to affect promotions in the real world — a study result reported in the Mercury News but not discussed in the abstract. Among other mechanisms, the lower signal-to-noise due to subjective parts of the evaluation process may give the underlying discriminatory tendencies some legal cover.

6. It looks like a "Fun With Surveys" item that parents in general are considered "less agentic" than non-parents, yet fathers are reportedly viewed more leniently than childless men.

7. If there's any content to the marginal productivity theory of compensation, parents are probably not actually "less agentic" than non-parents. This may, of course, be a confounding effect of work experience.

Can David Brooks Use His Powers for Good Instead of Evil?

The gross error in Brooks' analysis is that the policies that the "Gingrichian" Democrats want to preserve are broadly popular — some cognitive dissonance shown in the latest polls notwithstanding.

Furthermore, Brooks would be more believable if not for the detail that even some Republicans in Congress are worrying that the as-yet mysterious Big Plan is, in Nouriel Roubini's colorful characterization, a "Social Security Suicide Scheme."

Talking Points Memo, loading very slowly this morning, has been the essential resource for political maneuverings on Social Security "reform."

Monday, January 17, 2005

Revenue Non-Maximization at Blackwell

by Tom Bozzo

Re that last post, the item on today's Wisconsin State Journal business page I really wantes to comment on is actually a reprinted San Jose Mercury News item (link presently in madison.com limbo, sorry, and the original is in the Mercury News paid archives) describing a study of attitudes towards parents in the workplace.

However, Blackwell wants a ridiculous $25 for 30 days' access to the full text of the Journal of Social Issues article referenced therein. I wonder if there is any significant demand for legal a la carte access at those terms. NBER at least passes the laugh test with its $5 working papers.

Sadly, I'm not remotely powerful enough to have a worshipful personal assistant to send to the UW library to get me unlimited access to the article for a "fair use" straining $2, or whatever the actual photocopying charges might turn out to be. Yet my time is too valuable to go after the damned thing myself on a lark. (But still I blog. Go figure.)

It is presently a matter of tomorrow morning's mood as to whether I will find fault with the article based on its abstract and the Mercury News reporting, with the logic of Maureen Dowd's "Men Just Want Mommy" column (reprinted in Sunday's State Journal), or something completely different. Stay tuned, late night visitors!

The NASP web site violates the First Law of Trade Association Web Site Design by failing to explain to visitors who happen not to be an insurance law professionals what subrogation means and why we should care. Compare big PhRMA's home page, which does not fail to offer a link to "straight answers" (PDF) regarding pharmaceutical marketing and promotion. That's why Billy Tauzin makes the big money (not really)!

Life is Tough

by Tom Bozzo

Monroe Street purveyors of optimistically-themed T-shirts and related items J.B. Goods, previously Life Is Good, have a For Lease sign in the window.

Comment: We strolled in there back when John was an infant, and the staff there were so sunny in their dispositions to match the array of merchandise that I gave them six months and wondered if the commercial loan officer at the bank had actually read their business plan. That they survived for two years is something of an accomplishment.

However, given the zeitgeist, Twigs — also new at the time — has done much better with Kate Spade handbags and other products to help affluent Madison women play Big City.

"It sounds absolutely awful," said Jonathan Cheban, a nightlife publicist. "V.I.P. rooms are for real V.I.P.'s; you're not supposed to buy your way in. Who knows who these PartyBuddys people are? Maybe they're celebrity stalkers."

Even less surprisingly, the clubs themselves love it:

"The new V.I.P. isn't a downtown trendy, a Suzanne Bartsch or a Chi Chi Valenti*," he [NYC club designer Steve Lewis] said. "The new V.I.P. is a businessman with a credit card in his pocket who is willing to spend money." [Emphasis added.]

Real V.I.P.'s — or more properly S.F.P.'s** — are renowned for expecting to have the world comped for them. This is not completely without consequence for the break-even constraints of clubs that are expected to operate like businesses. Thus, the brokers, consultants, and salespeople in town from fly-over country (e.g., here) turn out to have green money after all.

Still, this is Exhibit Q for why the top federal income tax rates promptly should be returned to Clinton-era levels.

Rocket Science, Worth It?

by Tom Bozzo

In comments here, Nina (C) affirms her, A's and B's commitments to science but raises the basic utilitarian question of what space expenditures have sufficient returns to be justifable against the alternative of pressing terrestrial needs.

My little joke about toy rockets having taken a somewhat serious turn, it's time for a clarification and a summary look at the NASA budget (large pdf).

I previously held up the Cassini probe as an example of a good rocket, and our new ballistic missile "interceptors" as an example of bad, bad rockets. The subtext was that for the enormous sums so far spent on not defending the U.S. from ICBM attacks, you could endow the NASA space science budget.

However, this should not be interpreted as "civilian rockets good, military rockets bad." The latter may be necessary if not good or bad as such. Morover, roughly half of NASA's space expenditures are, by value-of-the-science criteria, colossal wastes of good dollars on bad space ships: the Space Shuttle and the International Space Station.

Of course, the Bush administration's space struggles have given us the irony that the one Shuttle mission arguably worth its expense in scientific yield — the Hubble Space Telescope repair mission — is the one that they've been trying very hard to avoid.

ANYWAY, the FY 2005 NASA budget summary would spend roughly $8 billion on not especially valuable human spaceflight (mostly Shuttle and ISS operations, but including small amounts to fund the Bush "exploration vision") and another $7 billion on everything else, by its full-cost accounting. Most of the rest is a relatively paltry billion in aeronautics R&D expenditures.

For discussion, and as the morning blogging window is closing, I'll aver that the 30 percent ($2.25 billion) spent on Earth science and "Sun-Earth Connection" missions would probably pass cost-benefit muster given, if nothing else, the potential economic cost of our climatological ignorance.

About $1.5 billion goes to extrasolar astronomy and cosmology missions. Another $2 billion is spent within the solar system. That's a bit more than 50 cents per (worldwide) capita per year to better understand the origins of the Universe. That doesn't seem too extravagant to me, either, though the fuzziness of how to value the contribution of basic science to human culture makes a cost-benefit calculation difficult at best.

That leaves about $1.25 billion on other physical sciences research and R&D to build better space probes.

Earth to Dennis

by Tom Bozzo

Looking for some pre-trial image rehabilitation, perhaps, L. Dennis Kozlowski tells the Times that the $6000 shower curtain wasn't his idea. It was the fault of the interior designer to whom he gave a blank check!

I suppose there are neighborhoods in Manhattan where that explanation might fly.

Then again, there is the $1 million plus Tyco spent on his wife's infamous birthday party on Sardinia. Readers may recall that much of the video of the party was suppressed as prejudicial in the first trial.

The Times euphemism award goes to this passage, pertaining to the party-related:

...with a now notorious ice sculpture of Michelangelo's "David" that flowed vodka.

Friday, January 14, 2005

The End of the Line

by Tom Bozzo

Boeing reports that it is taking a $340 million charge against earnings to wind down production of the Boeing 717 (note: Flash animation at the link) next year. This effectively extinguishes, after 73 years, the line of Douglas airliners.

The 717 (née MD-95), which Boeing inherited when it acquired McDonnell-Douglas in 1997, is a descendent of the venerable Douglas DC-9, now in its 40th year of airline service. As airliners are among the longest-lived producer durables there are, I expect a few newer models to be soldiering on when John and Julia are out of college.

I figure I've spent roughly a month altogether on DC-9s and successor models — mainly Northwest's in my late frequent flying career*, but also on Midwest, TWA, American, USAir(ways), and Eastern. The relative dearth of middle seats due to the 4/5-across seating remains a nice feature**, though the much wider A320 is a bit more comfortable overall. Vibration-canceling engine mounts installed by Midwest and Northwest in the late '90s also greatly improved the DC-9 experience.

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* After five blissful years of Gold or better, I was only Silver Elite last year. Despite 996,748 career WorldPerks miles to date, I'll be a Non Elite flyer as of March 1st. Naturally, I anticipate heavy business travel for the upcoming summer and fall.

The Price of Style?

As I'm mulling Nina's post on The Substance of Style, MacNN directs me to Paul Kedrosky's flame bait in the (Canada) National Post:

You have to love Apple Computer. Not, however, for its products. Those are over-glossy fashion plates designed for the people who like to overpay for products and then brag about it...

While many people would never buy a BMW-style personal computer, the same way many people who can afford a BMW car would rather buy something cheaper and more functional for half the price [sic], there is no denying tastes, so there is undoubtedly a market for people who want to buy opalescent over-priced computers from Apple.

Kedrosky wields just about the dullest butter knife in the Mac-dissing arsenal, as elementary research reveals that the Apple brand premium over comparably-specified PCs is small and not always positive. But forget about that for a moment. Should a stylish product be presumed to be "over-priced" compared to its graceless kin? Should valuing style be dismissed as mere pretension?

Dr. Kedrosky, whose UCSD biosketch describes him as "trained in business theory and as an engineer" should know better than to suggest so on both counts. Qualities of style that are valued by some consumers should in fact end up with positive prices in the market, as he sort-of concedes.

I'm not obviously "overpaying" if I want — in the sense of the neoclassical utilitarian consumption model — to run my fingers over a cool, smooth titanium palmrest while I'm figuring out what to write. After all, I spend a lot of time with my PowerBook. Rather, it's the Miracle of the Market that Steve Jobs is in business to take my money and satisfy my preferences! Virginia Postrel and David Brooks (1) are smart enough to figure this out.

And, notwithstanding the fact that I was pulled into Jobs' "reality distortion field" by the original PowerBook G4 announcement, I cross-shopped the ThinkPad T-series before pulling the trigger on the Titanium and concluded that IBM was commanding a larger brand premium than Apple at the time.

P.P.S., writing in near-real-time about a major Steve Jobs address turns out to be a way to draw a comparatively large volume of traffic to one's obscure blog. Site Meter tells me that roughly 75% of the visitors who arrived here on Tuesday via Technorati and other searches pertaining to the Mac mini (more than doubling typical daily traffic) were PC users.

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(1) Cf. the discussion of "inconspicuous consumption" in Bobos in Paradise. Yes I do think that Brooks can be a [term for part of the male anatomy] and that his pop sociology shtick is wearing thin. Similar to Nina, I'm not going to deny that I enjoyed Bobos on account of that.

I'm Not Thrilled With Jim Doyle, But Considering the Alternative...

by Tom Bozzo

A sidebar in the Wisconsin State Journal article (sidebar not online) on Gov. Doyle's State of the State address reports that a proposal to increase University of Wisconsin funding faster than corrections funding — for a change — made it into the text provided to reporters, but was cut from the final speech. The number crunchers are reportedly still trying to figure out how to make it work.

Decreasing higher education funding is one unfortunate side effect of a "no new taxes" pledge that headlined Doyle's 2002 campaign to unseat the incompetent Tommy Thompson lieutenant Scott McCallum.

I should probably give Doyle a break for having to work with a legislature that often is to him what the Newt Gingrich Congress was to Bill Clinton. That also reminds me that the alternative to Doyle is basically fascist theocracy.

Still, it's not exactly radical to say that corrections expenditures are excessive. (I await a knock on the door from a representative of the prison-industrial complex.)

Wednesday, January 12, 2005

Rivals of the Subaru "Tribeca"

by Tom Bozzo

At Columnist Manifesto, "Oscar" reveals that someone actually read a portion of my post deriding the naming of the new Subaru SUV. This ensures a second round of vehicle name critiques from the array of concept cars shown at Detroit.

1. Chrysler Firepower. This BFG is a GT coupe relation of the Dodge Viper that will, if produced under this name, subject its owners to endless erectile dysfunction jokes.

2. Ford SynUS. Huh? Sinus? This Automotive News article offers no explantion of what a SynUS is supposed to be. Ford catches on to the box-on-wheels fad (cf. the extra boxy Scion xB) with this small SUV inspired by the appearance of, no kidding, armored cars.

3. Jaguar Advanced Lightweight Coupe. Ford here goes totally boring for what is actually a very fetching hatchback that strongly telegraphs the look of the forthcoming aluminum-bodied replacement for the aging XK8.

4. Volkswagen Ragster. Going for a bit of "Boxster" magic (and the "Boxster" name is kinda dorky if you think about it), VW says it contracted "ragtop" and "speedster" for this chopped-top New Bug-meets-2CV. Why not just drop the "d" from dragster?

The Executive Compensation Thread Goes to the Detroit Auto Show

by Tom Bozzo

GM Vice Chairman Robert Lutz receives approximately $6.5 million annually in salary and bonus, plus whatever incentive pay and other goodies his employment contract calls for. A famous car nut, he is paid to shake up the focus group centered product design culture at GM that begat the likes of the Pontiac Aztek. Could he be worth it?

The potential value of a hit that could be attributed to his influence would be enormous. Knocking $2000 off the discount required to move a domestic-brand car in the quantities of the Chrysler 300, generally regarded as a hit (1), would increase profits by more than a quarter billion dollars. So it's quite possible he could earn his keep.

Lutz's record to date has been mixed at best, though. The largely successful design theme at Cadillac substantially predates his influence (2). The importation from Australia of a federalized Holden Monaro as the Pontiac GTO has been a disaster. Pontiac sedans minus the plastic strakes are still rental car material. A Buick LaCrosse pulled up next to us on the way home from brunch at Marigold Kitchen last Saturday and I was unmoved.

Still, there is a ray of hope yet for Lutz with, of all things, forthcoming Saturns. Saturn was conceived as GM's import-fighting division (3), but Suzanne's old SL1 always left me wondering why she hadn't just bought a Civic. Still, Lutz thinks he can get Honda Accord and VW Passat intenders to consider a Saturn Aura.

Amazingly, the Aura looks like a real car that may have power and comfort and other things Saturns have largely lacked to date, and might have a shot (maybe not so much in the large coastal cities) if it isn't messed up too much between the near-production concept shown at Detroit and what actually hits the streets.

One source reports that Lutz will, like most other GM executives, work without an employment contract after 2005. An interesting governance test for the GM directors will be how long of a grace period Lutz will have after 2005 if he doesn't actually manage to conjure a hit car by then.

I Didn't Even Ask, and Yet I Received

by Tom Bozzo

When I was composing this post, I had been wondering how many bars there were in Madison. Today's State Journal provides some information: Madison has "about 300" active "combination" licenses (permitting the sale of beer, wine and liquor), plus another 98 licenses permitting only beer or wine sales.

Why does the issue arise, you might ask?
Madison is on the verge of running out of liquor licenses under a 1997 law that caps licenses according to a formula based on population growth.

What interest group was promoting the cap? The Temperance League?
The Tavern League of Wisconsin.

The Market and Agency Problems in Corporate Governance

Continuing with the executive compensation theme (I'm not sick of it yet, either) at Pub Sociology, Brayden King drops the MF (1) bomb:

Just because the market produces a specific outcome doesn't mean that it is necessarily the best outcome.

This is sufficiently obvious for the executive pay system that even "director primacy" advocate Prof. Bainbridge, discussing Bebchuk and Fried's Pay Without Performance, acknowledges the underlying market failure:

[T]he system by which agency costs are to be checked is itself tainted by an agency cost problem.

What Prof. Bainbridge doesn't accept is Bebchuk and Fried's solution, a shift to "shareholder primacy" in corporate governance. He promises a scholarly discussion soon. I'll grant that there is good economic cause to exercise caution, insofar as it may be worse to "solve" the shareholder-director agency problem with some combination of collective action and control problems.

However, the pushback under the rubric of "regulatory overreach" against such obvious remedies to the agency problems as requiring independence of directors (at the link, specifically, mutual fund director independence is at issue) provides some prima facie evidence that segments of the corporate world aren't serious about solving the problem within the existing governance system. Why could that be?

Also not passing the laugh test so much is the argument that we must have a compensation model that is equivalent to arm's-length relationships between directors and managers because the Market wouldn't stand for it. Here's an example of the argument, from Marginal Revolution's Tyler Cowen (quoted by Prof. Bainbridge here), from a WSJ review of Bebchuk and Fried:

But the arm's-length model is not so easily defeated. Assume the worst -- that CEOs and boards are in cahoots. Outside capital still approaches this corrupt bundle from its own arm's-length point of view. If the problem were a big one, surely some firms would set up truly rational and fair executive-pay incentives to attract capital at a lower cost. And over time we would expect those firms to succeed in the marketplace. But there is no evidence of this happening. One would think that new firms would be in the best position to correct the inefficient status quo, but the data do not suggest that they are set up with more "rational" models of governance.

With this argument, Prof. Cowen makes me think first of Robert Waldmann's brilliant blog tag line, "Asymptotically we'll all be dead." It's funny if you're an econometrician, really!

Among the objections one might raise, some firms are trying very hard to keep private the true cost of their executives' pay packages. Also, it's not clear that new firms would correct the "inefficient status quo." Apart from the inefficient-for-whom question, it's worth considering that new firms may seek to acquire instant credibility by recruiting boards of directors that resemble the feckless boards of older firms.
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(1) Market failure.

Tuesday, January 11, 2005

The Leader Spoke

by Tom Bozzo

I was going to hold off until later, but I see from the MacCentral "live blogging" of the Jobs keynote that Apple did not, in fact, sue Think Secret over nothing. The G4-based "Mac mini" will start at $499. The music section of the keynote is in progress.

Update 1: The Mac mini looks like the Cube jr. in an anodized aluminum case a la the PowerBooks. The enclosure measures 6.5 x 6.5 x 2 inches and weighs 2.9 lb. The specifications are otherwise in iBook/PowerBook territory, which is to say perfectly respectable for everyday use with the notable exception of graphically cutting-edge games. The price looks a lot more right than the poor Cube's at first glance, but a good question is how the price runs up with obvious add-ons (802.11g card, Bluetooth, extra RAM). Finding that out will have to wait until traffic dies down at the online Apple store.

Update 2: Is it worth it? Well-equipped, the Mac mini prices out around $800-900 plus monitor. At this price, I think Bob Snow at PowerPage nailed it: for an owner of a pre-existing digital TV with a DVI or HDMI interface, the mini looks great. With a low-end flat panel, it's still a not immaterial amount cheaper than the iMac. The question is whether this is cheap enough to resolve most price-performance tradeoffs with iMacs and Apple portables — not to mention the PC rabble.

As a technical matter, it's curious that the Mac mini does not seem to be a headless iMac as the rumors described it so much as a headless iBook.

As for the other prognostications, I lose on the Tiger ship date, just indicated as first half of '05, and the PowerBook speed bump. ThinkSecret had described the latter shortly before the Expo as "confirmed," validating one reader's warnings about putting too much stock in the Mac rumor mill. I still think a quiet bump for the PowerBooks is probable unless the G5s are coming Really Soon.

The iPod "shuffle" did materialize. The name doesn't grab me, but I doubt that matters.

I can score myself a point for marking a concerted push of the iPod into cars, as factory iPod adapters to be available from Mercedes, Volvo, Nissan, Alfa Romeo, and Ferrari were announced. The iPod shuffle is not designed to be part of the car push, as it lacks the dock connector to which the car interfaces connect.

Also, the "shuffle" has, despite its lack of moving parts, the same operating temperature range as the hard drive iPods, according to the shuffle's specs page. So the shuffle is in principle no more suitable for a very hot or very cold glovebox than the full-fledged iPods.

I also note with mild amusement that the Mercedes adapter will be twice the price of the BMW interface, which has been available for a few months.

Update 3: The Mercedes adapter does have significant additional functionality compared to the BMW connector: you can browse all playlists on the iPod, and the in-dash multifunction display shows track information. The BMW setup only allows access to a limited set of playlists via the station preset buttons and does not display track names. Needless to say, "M[ercedes]B[enz]USA['s legal department] recommends that this scrolling feature be used only when the vehicle is stopped and that full attention be paid on the road."